CBO to Congress: Reform Entitlements Now or the Economy Dies!
Posted May 20th, 2008 at 7:34pm in Entitlements 
Print This Post
At the request of the Ranking Member of the House Budget Committee Rep. Paul Ryan (R-WI), the Congressional Budget Office (CBO) released a letter (pdf) today detailing the grave fiscal situation our country will be in should Congress fail to reform Social Security, Medicare, and Medicaid now.
Already Social Security and Medicare consume 7.5% of our GDP. Unless changes are made that figure will jump to 13% by 2030. There are three basic alternatives Congress has to address this problem:
- Deficit finance this massive increase in spending. According to CBO’s analysis, deficit finance would by 2040 cause a halt in per capita income growth, and by the late 2040s per capita income would be down 17 percent.
- Finance this spending by raising taxes. According to CBO, assuming no economic consequences from higher taxes, tax rates would have to more than double. CBO calculates the 10 percent individual income tax bracket would have to increase to 25 percent. The 25 percent tax bracket would have to increase to 63; and the top bracket would jump to 88 percent. As CBO notes, “such tax rates would significantly reduce economic activity and would create serious problems with tax avoidance and tax evasion.”
- Restrain the growth in spending.
Heritage Senior Fellow Dr. JD Foster comments: “Budget analysts and commentators across the political spectrum have worked hard to explain and to establish beyond a shadow of a doubt that the nation’s big three entitlement programs – Social Security, Medicare, and Medicaid – are unsustainable and must be reformed. This letter from the Congressional Budget Office to Congressman Ryan puts an emphatic exclamation point on this work. The CBO analysis makes clear and indisputable the economic calamity that will befall the nation if congressional inaction continues. The entitlement programs represent an avoidable disaster, but Congress must act to avoid it.”
Author: 
5 Responses to “CBO to Congress: Reform Entitlements Now or the Economy Dies!”
Kevin McCarthy, Orlando Florida on May 20th, 2008 at 7:34pm said:
Dang Straight but congress have the guts…Paul I will pray that your bill & awareness to this fact will have an impact!
The Congress needs to comes to their senses but that will take a Miracle from God as usual!!
Good Orderly Direction [G.O.D.]legislation for the people; BY THE PEOPLE…REMEMBER!!!
Harry – Chicago, IL on May 20th, 2008 at 7:34pm said:
Again, I salute Rep. Ryan for his bold plan and attempt to once again bring this issue to the forefront of our domestic economic well-being. It is this kind of leadership that is crucial to the survival of our party and nation. Let us rally around the Wisconsin congressman and let him know we appreciate his conservative ideals and approach to solving the problems this country faces.
Harry – Boston on May 20th, 2008 at 7:34pm said:
Let’s separate the wheat from the chaff…
Break down Social Security into two parts.
Part one is the portion that provides people with a very modest return on THEIR and their employers contributions.
The other part is where people are given checks for any number of reason This is the “entitlement”
(welfare)part.
Medicare is funded by retirees by taxing them througout their working years and by payments from their Social Security after they retire.
Medicaid is FREE health care provided to people who probably have not made any contribution and is funded by the taxpayers. This is another so called entitlement(welfare)program.
Every year politicians pass legislation that allows more and more people to access these back door welfare programs.
This is what Hillary meant when she recently said that”We(Barack et al)must make sure that prosperity is properly distributed and shared.”
Translation:
We will take more of your stuff and give it to others.
Wake up America!
Kirk Sinclair Norfolk, CT on May 20th, 2008 at 7:34pm said:
My response to this is the following graph, created from data in the National Income and Product Accounts tables.
http://www.middleclassforum.org/?p=67
Barry – Rye NY on May 20th, 2008 at 7:34pm said:
Congress act on entitlements? Don’t be naive. What we’re looking at is the end of America as we know it: a breakdown of the social order and the economy, riots and general unrest, followed by the rise of a single individual who will promise to “save us”, and who will become, essentially, a dictator. It was a good run, over 200 years, but it’s all over but the shouting.